A woman shops for snacks at a supermarket in Quezon City, Jan. 16, 2023.
— PHILIPPINE STAR/MIGUEL DE GUZMAN

TAX REFORM measures could potentially generate as much as P120.5 billion in additional revenues next year, the Department of Finance (DoF) said on Thursday.

Pending before Congress are the Passive Income and Financial Intermediary Taxation Act (PIFITA), value-added tax (VAT) on digital service providers, a new mining fiscal regime, motor vehicles road user’s tax, as well as excise tax on single-use plastics, pre-mixed alcohol, sweetened beverages and junk food.

“These tax revenue measures will enable us to raise revenues totaling P120.5 billion or 0.5% of GDP (gross domestic product) in 2024 and P183.2 billion or 0.6% of GDP in 2026,” Finance Secretary Benjamin E. Diokno said during a  Development Budget Coordination Committee (DBCC) briefing before the House Committee on Appropriations.

“We will continue to work with Congress in pushing for key reforms crucial to accelerating economic development,” he added.

The PIFITA is expected to generate P8.5 billion in revenues next year, P7.2 billion in 2025 and P5.5 billion in 2026. It has been approved by the House but is pending at the Senate committee level.

Meanwhile, the bill imposing a 12% VAT on digital transactions has been approved by the House and is also pending at the Senate committee level. If enacted into law, its projected revenues are seen to reach P17 billion next year, P18.3 billion in 2025, and P19.5 billion in 2026.

The bill seeking to impose an excise tax on single-use plastics is expected to generate P6.5 billion in 2024. By 2025 and 2026, it is expected to raise P7 billion and P7.4 billion, respectively. It has hurdled the House but is still pending at the Senate committee level.

Meanwhile, the proposed excise tax on pre-mixed alcohol is pending at the House Ways and Means Committee. The measure is expected to generate P400 million revenues annually in 2024 and 2025, and P500 million in 2026.

The DoF has recently pushed for a tax on pre-packaged foods lacking nutritional value, as well as raising the sweetened beverage excise tax. This is projected to generate additional revenues of P75.7 billion in 2024, P90.7 billion in 2025, and P106 billion in 2026.

The House Ways and Means Committee last week approved a new mining fiscal regime, which is expected to raise P12.4 billion in 2024, P12.9 billion in 2025 and P13.4 billion in 2026.

Last month, the House Ways and Means panel approved a measure that seeks to amend the existing motor vehicle user’s charge. It is seen to generate P15.8 billion by 2025 and P31 billion by 2026.

Earlier data from the DoF showed that the implementation of key tax reform laws generated P202.8 billion in additional revenues in 2022.  

Meanwhile, Mr. Diokno noted that the luxury tax is not being considered by the DoF.

“When you try to tax a luxury good, people will just go abroad and buy it there. You have to consider those things. The simplicity of the tax, how easy it is to avoid. The luxury tax is not part of our proposal at the moment,” he said.

For his part, National Economic and Development Authority (NEDA) Secretary Arsenio M. Balisacan said he supports the possibility of a luxury tax.

“I’m in favor of taxing goods that create congestion. Why don’t we tax luxury vehicles that add to the problems of traffic, things like that,” he added.

Albay Rep. Jose Ma. Clemente S. Salceda, who chairs the House Ways and Means Committee, earlier proposed to impose a tax on “nonessentials” like jewelry, high-end bags and watches, luxury cars, private jets, and upscale residential property.

The National Government is expected to raise P4.27 trillion in revenues next year, equivalent to 16.3% of GDP. — Luisa Maria Jacinta C. Jocson

Neil Banzuelo